Looking for fast food? Here are three stocks you might want to consider.
Discussed in this article: McDonalds Corp ( $MCD )
I want to look at McDonald’s ( NYSE:MCD ), and a couple other food restaurants too. Look, McDonald’s ( NYSE:MCD ) really has taken it on the chin lately, I think the CEO said in a conference call that the rest of the year would be challenging. We don’t like to hear CEO’s talk about challenging, we like to hear them talk about wonderful and that type of thing, or hitting on all cylinders; challenging doesn’t work.
So let’s say you want to get in the restaurant industry though, you want to be long something in this sector. Here’s what you’ve got to look at; McDonald’s ( NYSE:MCD ), downtrend, we could say this is a sideways thing, I could draw all kinds of patterns here. The bottom line is, this is the one that really matters, and it’s not the obvious thing; I’m not talking about, “Oh, this trend break here, this is going down 84.00.” No, this stock has been under distribution for how many days? It’s like every single day, and the volume has been about average, actually a little less than average.
But the stocks just printed this lower high, and that’s a problem. Lower high followed by a lower low, well here’s the rub. The 200-day moving average, this 200-day moving average was pretty relevant back then on the upside. It was actually quite relevant here, when the stock rallied up to it, and could not get through it. Then it fell back, 50-day moving average, and finally blew through it after, what? After a pullback for one day it finally got through.
My point is, traders look at the 200-day moving average on McDonald’s ( NYSE:MCD ). But what’s really kind of ominous is, the 50-day is trending lower. Unless this stock takes a dramatic I move to the upside, give this another couple weeks and you will have the 50-day moving average probably testing the 200-day moving average. But as a trade, here at $95.00, my bet is the stock’s going to hit 97.00 before it’s 93.00. Short term, oversold here, you can see stochastics.
Another thing I want to look at, aside from stochastics, you’ll notice the chart got a little different; we’re going to look at Moving Average Convergence Divergence, MACD. So Moving Average Convergence Divergence, MACD is negative, it’s below the zero line; its also printing lower highs from clear back here. So this is not a stock that we really want to mess around with right now, no thank you.
Now, how about Starbucks ( NASDAQ:SBUX )? They also happen to make stuff that McDonald’s ( NYSE:MCD ) does. Okay, I like Starbucks ( NASDAQ:SBUX ) better, this isn’t a broken stock this is a stock that’s in an uptrend that’s pulled back, looks like it’s finding some pretty good support. And I’ll say here, at $70.00, I would say Starbucks ( NASDAQ:SBUX ) is more likely to hit 75.00 than 65.00 first. Why? Well because we see this uptrend, a nice steady uptrend here on the 50-day moving average, lower lows, lower highs.
We see here, like on McDonald’s ( NYSE:MCD ), stochastics are getting pretty close to oversold here, getting pretty close to oversold. They’re getting close to oversold, looking for a bounce. What about MACD? Okay, MACD, looking a little better; first of all its all in the plus column, it’s all above the zero line so it’s in a nice uptrend, printing higher lows and higher highs, so MACD works. This little signal line, this little crossover here, what this does is just really reflect a sell signal like we got back here.
But the funny thing is those sell signals are only good for about two or three days, because that’s what happens with uptrending stocks. With these up trending stocks these sell signals are really more like, well, its probably just going to pull over a bit.
Now here’s another one, Chipotle ( NYSE:CMG ). Chipotle ( NYSE:CMG ), MACD, really, really nice trend right up above the midline. If we zoom to get rid of all that data here, you’ll see a better indication. Very nice upside momentum, high just about where this one was, and a crossover, a sell signal here. Not much of one though. The stocks in a volatility squeeze, my bet is, this stock gets up to 420.00 before it gets down to 380.00.
My point for going through this is pretty simple, if you’re looking for food stocks, McDonald’s ( NYSE:MCD ) is probably going to get a nice little short term bounce, I can’t just think the stock’s going to continue to move lower. It broke through the 200-day moving average, but I’ll say it again, I look at these zigzags and you’ve just got to expect some buying; it has a 3.2 percent dividend, a lot of traders, a lot of investors are going to look at that. So this is one that might work for the short-term.
For a longer-term investment I’d look at Starbucks ( NASDAQ:SBUX ), 1.2 percent, that’s not that big a deal, the stock moved 2.3 percent today, so that doesn’t really get my attention. And then of course Chipotle ( NYSE:CMG ), a big whopping zero dividend, but, the stocks in a really nice configuration too. So you can take either Starbucks ( NASDAQ:SBUX ) or Chipotle ( NYSE:CMG ) and you’re not going to go too far wrong.